Noob with 5k to invest

I’m a true noob here. I apologize ahead of time if I say anything that’s stupid or maybe obvious. I’ve spent 5k investing in Nvidia, chipotle, and scmi. Unfortunately, that was just 5 days ago and I’ve been losing ever since. I first thought of course is to cut my losses and sell, but maybe the smart thing to do is to diversify more so instead of just three stocks have 20. Even though I only have 5K to spend. I joined motley fool in the hopes that I could get some advice for where to invest my money but things seem to be moving so fast that one day a stock will be recommended when the next day it won’t. I feel kind of like a fish out of water here. Any advice I could get would be greatly appreciated. Should I just stick with what I have for a while and just handle the downturn sit on my hands so to speak? Or sell off some of my stocks and diversify.

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Welcome, Holt64. We’re glad you could join us.

First, why did you buy those stocks? If they were worth it when you bought them, aren’t they a better buy now? Shouldn’t you buy more? Yes, if you think they are still worth it.

This appears to be a correction led by tech stocks. I happen to think Nvidia is an AI leader and likely to report good numbers end of May. People are nervous about the prices paid for tech stocks. And maybe over reacted. ASML maker of chip mfg equipment reported slowing sales due to restrictions on sales in China. TSM lets us know they make chips for Nvidia and are sold out on those but much of their volume is commodity chips like memory chips. Chips for smart phones. PC sales have been slow after the Covid boom. Auto chips are recovering after the shortage that resulted in over stocking. They see signs of recovery but too slow for some.

Nvidia was hurt by govt stopping high tech chip sales to China but they have redesigned chips that can be sold there if not with best performance. We shall see if that strategy works. They are a well managed company and clearly an industry leader. The only clear leader in AI and making profits from sale of chips for AI.

Chipotle has been doing well. We get mixed info on the economy. Some say economy is strong and unemployment is low. But consumers are getting more selective on what they buy. Mostly it’s the low end consumers cutting back. Chipotle and Costco are more upscale. Their customers should be ok, but not all of them. So a toss up.

I’m aware of SCMI and its rising share prices. I don’t own them. Don’t know if they are worth the price. What are their prospects?

Every stock you buy will go up down or sideways when you buy. You should have a strategy for each situation. Stepping in when you see a stock over sold is ok. Generally I don’t hold losers unless I think they are likely to recover fairly soon. Pros say you are best to have a well defined sell price. For some its 15 to 20%. If down that much you should at least review carefully and decide what to do. You can be best off to admit your timing was bad and sell. That preserves capital especially if the sell off continues.

Most think this is a temporary correction. But no one knows for sure. War in the mid east. Rising oil prices. The election. Etc etc. Lots of uncertainties.

Good luck with your choices.


Wow Holt you have a lot to learn, but lucky for you it sounds you have a long time to learn it. So, at least you bought 3 good companies. NVDA and SMCI are very cyclical. NVDA because it is in the chip market and SMCI because it is selling into the Data centers. SMCI has really taken off because they are building servers with NVDA chips in them that everyone wants, but be careful. It will crash when this run is over, but that isn’t now. So tell me, do you know how to read the financials of a company? How do you pick the companies that you want to invest in? There are many ways to invest and none of them are wrong its just up to you to pick the way that is best for you. So tell us how much you know and then we can point you in a direction that will help you.


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@Holt64 Sounds like you have an intuitive sense for business quality (if they disappeared tomorrow, would their customers care?). I challenge you to explore topic of valuation. High quality businesses like Chipotle & NVIDIA can be more or less attractive investment opportunities depending on the price we pay. Buying a share of a company is partial ownership of the business. With that ownership, we are entitled to a slice of the future cash it generates.

Valuation is a key prerequisite to successful investing - valuation to me is forecasting the future normalized cash flow per share of each investment opportunity and determining the fair price for those future cash flows. Some businesses are more cyclical than others - normalized means averaging the highs and lows across an earnings cycle. I say per share as some businesses create more shares (share based compensation granted to employees & selling shares to raise cash) which dilutes the earnings to which each shareholder is entitled. Other businesses reduce the share count or concentrate the earnings across a smaller denominator of shares.

The future growth rate of a company’s annual cash flow helps to determine the appropriate price to pay. Some variation of PEG ratio could be a helpful starting point to weigh price to earnings to growth.

P - Price - Market Cap or Enterprise Value
E - Earnings - Operating Cash Flow or Free Cash Flow or Net Income
G - Growth - Rate of future annual growth for earnings metric of choice.

This is the one book I keep on my desk to get smarter in the valuation department:

Expectations Investing: Reading Stock Prices for Better Returns, Revised and Updated (Heilbrunn Center for Graham & Dodd Investing Series)


Stock prices can decline or go sideways for periods of years, not just days. Therefore, investing in individual stocks requires near-absolute conviction in the companies you are investing in.

Motely Fool was originally created around the idea of investing in individual stocks, so this is a decent place to start. However, I am firmly convinced that most investors, especially new investors, are better served by owning low cost index funds, like VTSAX. Then simply check your balance once a year and don’t worry about it.


Yes, and Motley Fools CAPs program is a good way to experiment with picking stocks. Once you enter 7 stocks in your portfolio, TMF rates your performance vs the index everyday. Once you have learned to beat the index consistently, its easy to switch to real money investments. Until then index funds (or ETFs) are a better choice. Let the pros pick the stocks while you learn.

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Hello friend, I can only tell you we hat has worked for me. I got in on Devon Energy when it was under $40.00. It has gone to almost $53.00 and has gone past its 52 week high of $55.00 before the inflation report came out. My next move is Permian Resources. They are on the way up at $17.00. You must also understand oil is a commodity and has it’s own ups and downs. Right now Devon Energy is making me money. Also, Permian Resources is making me money alsobut it has a farther way to go. When it is in short supply it goes up or during an inflationary period or a recession. I am convinced a recession is on the way and you will hear the first about it when the tourist traps begin to lose money around memorial day. People will stop spending and travelling. Ìt will ŕally hit around september. When it is having a surplus the price goes down. This is the time to buy more shares.

Hi Holt64

Welcome to the Motley Fool.

You’ve gotten some great advice/insight from pauleckler, buyinholdisdead, and colebarcia about how to think about your companies. It is definitely too early to give up on your new purchases. If it turns out that owning individual stocks isn’t your cup of tea, you could do worse than buying some low cost index funds as syke6 suggests.

You can find the paid side of theMF community here. There are discussion boards dedicated to the discussion of Nvidia here, Chipotle here and SMCI here.

But, as you can see it hasn’t been a good last few days for your companies or the S&P.

This is what they have all done in the last year:

The companies are doing fine. Stock prices move around based on lots of things. Business changes more slowly.